The month-on-month output decline, although minor, still indicated weakness in China’s battery market, market participants said.
Market participants along the battery supply chain had already anticipated a weak battery market for the fourth quarter of 2023. In September, market participants generally expressed that they did not expect to witness a “golden September, silvery October” in the upstream lithium market, which would have signaled an uptick in the fourth quarter demand if it had happened.
“The battery market is weak this year, therefore battery makers suspended production during China’s Golden Week holiday, which in turn contributed to the drop in the battery’s monthly output,” a Chinese battery producer source said, adding that Chinese battery makers were running production at full capacity during the Golden Week holiday in 2022 due to booming demand.
The sustained battery production in 2022 led to a 6.26% monthly growth in China’s power battery output in October of that year to 62.8 GWh from 59.1 GWh in the previous month, according to CABIA.
In addition, batteries were overstocked among certain battery makers, who were reportedly trying to destock under inventory pressure. The large inventories of batteries also curbed any need to further ramp up production in the typically strongest season of the year, sources told Fastmarkets.
“This year, the September is no longer ‘golden’ and October no longer ‘silvery’. Battery makers lowered production in October and were not making great efforts to reach higher output in final quarter [of the year],” a Chinese battery materials trader said. “We haven’t witnessed anything which would have boosted the demand for batteries or battery materials, and this weakness could persist into the first quarter of 2024.”
The same bearish sentiment was echoed among multiple other market participants, who expected that China’s monthly battery output would continue the downtrend in the remainder of the year.
The waning production of batteries and bearish sentiment in the upstream lithium market resulted in muted spot demand for lithium and led to a lithium price downtrend in recent months.
While market participants similarly expected that the softness of lithium demand and prices could easily persist into the first quarter of 2024, some others put on hopes for a short period of price stability ahead of the Lunar New Year holiday in 2024 from February 10-17, when the market becomes quiet and domestic transport comes to a halt.
Fastmarkets’ weekly price assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 141,000-150,000 yuan ($19,449-20,690) per tonne on Thursday November 16, down by 5,000-8,000 yuan per tonne from 149,000-155,000 yuan per tonne a week earlier.
Fastmarkets’ weekly price assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 130,000-145,000 yuan per tonne on Thursday down by 5,000-10,000 yuan per tonne from 140,000-150,000 yuan per tonne a week earlier.
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